lynk
Jun 20th, 2012, 12:09 AM
http://www.thestar.com/business/article/1213344--gen-y-guess-who-s-driving-the-luxury-market
Gen Y Canadians splurging on luxury items, despite high unemployment
2012/06/19
Ashante Infantry
Business Reporter
Canadian debt may be at an all time high, but national spending on luxury goods is up and Generation Y is leading the splurge on fashion, travel and dining.
According to an American Express analysis of its transaction data from 2009 through 2011, Generation Y consumers, those born since 1983, have been the driving force with increased spending on luxury fashion by 33 per cent, travel by 74 per and fine dining by 102 per cent. And 60 per cent of those shoppers were men.
“Anecdotally, when speaking to a lot of our retail clients, it really is the high end accessories,” said Colin Temple, VP & GM of Merchant Services at American Express Canada, of the most popular fashion purchases.
“Denim is now playing a key role in retail and jewelry is also seeing resurgence in spending. (When it comes to dining), Gen Y are really thinking about the experience and that’s not necessarily about the actual product itself that they consuming.”
It’s surprising at a time when youth unemployment is nearly double Canada's national rate which was 7.3 per cent in May.
“I guess for those that can actually have employment and are able to actually afford luxury products there’s still a growing demand amongst that particular population,” said Temple. “Social media is also playing a role here with regard to making luxury seem more accessible and affordable.”
Older Canadians, who once dominated the luxury market, are more measured, found the American Express Business Insights report.
Seniors spending on luxury fashion was up 2 per cent, but they decreased travel expenditures by 3 per cent and fine dining by 1 per cent. Boomers spent 24 per cent more on luxury fashion, 6 per cent more on travel and increased dining by 15 per cent. Gen Xers (those born after the baby boom up until about 1981-82) increased their spending on luxury fashion by 33 per cent, travel by 15 per cent, and dining by 31 per cent.
In the mix are a group of consumers who have not previously spent on luxury and have the lowest average transaction size, but comprise 42 per cent of total Canadian luxury shoppers in 2011.
“It may be somebody that all of a sudden is made aware, either through the popularity of a growing product, or through referrals from friends, to an experience of a new brand,” surmised Temple.
“It’s very encouraging to see that there is this growing trend. For a lot of retailers it’s going to be a question of how do they tap in and take advantage of this trend. How are they going to identify these newcomers to luxury spend, or the Gen Y category, and how do they actually change their communication and their marketing to meet the needs, which are very different, to the Gen Y consumer?”
Credit card spending on luxury goods is hardly what Bank of Canada operators would celebrate given their warning last week for citizens to rein in their borrowing, because a financial meltdown in Europe could push some Canadian households over the edge if it led to a global economic slowdown and a rise in unemployment.
That was followed by a Statistics Canada announcement that after falling slightly at the end of last year to 150.5 per cent, Canadian households' ratio of debt to disposable income rose to 152 per cent in the first quarter.
The younger Canadians who leading the luxury charge have a woeful “lack of understanding around consumer credit,” said Laurie Campbell, CEO of Credit Canada Debt Solutions which has identified overspending as the primary reason for bankruptcy (over job loss, health problems, marital breakup).
“You can’t blame a generation when they’ve been told over and over again that they deserve it, they should have it, ‘Go out and have fun,’ ‘Don’t take life so serious,’ ‘The party is now;’ and part of that phenomenon is spend, spend, spend,” she said.
Gen Y Canadians splurging on luxury items, despite high unemployment
2012/06/19
Ashante Infantry
Business Reporter
Canadian debt may be at an all time high, but national spending on luxury goods is up and Generation Y is leading the splurge on fashion, travel and dining.
According to an American Express analysis of its transaction data from 2009 through 2011, Generation Y consumers, those born since 1983, have been the driving force with increased spending on luxury fashion by 33 per cent, travel by 74 per and fine dining by 102 per cent. And 60 per cent of those shoppers were men.
“Anecdotally, when speaking to a lot of our retail clients, it really is the high end accessories,” said Colin Temple, VP & GM of Merchant Services at American Express Canada, of the most popular fashion purchases.
“Denim is now playing a key role in retail and jewelry is also seeing resurgence in spending. (When it comes to dining), Gen Y are really thinking about the experience and that’s not necessarily about the actual product itself that they consuming.”
It’s surprising at a time when youth unemployment is nearly double Canada's national rate which was 7.3 per cent in May.
“I guess for those that can actually have employment and are able to actually afford luxury products there’s still a growing demand amongst that particular population,” said Temple. “Social media is also playing a role here with regard to making luxury seem more accessible and affordable.”
Older Canadians, who once dominated the luxury market, are more measured, found the American Express Business Insights report.
Seniors spending on luxury fashion was up 2 per cent, but they decreased travel expenditures by 3 per cent and fine dining by 1 per cent. Boomers spent 24 per cent more on luxury fashion, 6 per cent more on travel and increased dining by 15 per cent. Gen Xers (those born after the baby boom up until about 1981-82) increased their spending on luxury fashion by 33 per cent, travel by 15 per cent, and dining by 31 per cent.
In the mix are a group of consumers who have not previously spent on luxury and have the lowest average transaction size, but comprise 42 per cent of total Canadian luxury shoppers in 2011.
“It may be somebody that all of a sudden is made aware, either through the popularity of a growing product, or through referrals from friends, to an experience of a new brand,” surmised Temple.
“It’s very encouraging to see that there is this growing trend. For a lot of retailers it’s going to be a question of how do they tap in and take advantage of this trend. How are they going to identify these newcomers to luxury spend, or the Gen Y category, and how do they actually change their communication and their marketing to meet the needs, which are very different, to the Gen Y consumer?”
Credit card spending on luxury goods is hardly what Bank of Canada operators would celebrate given their warning last week for citizens to rein in their borrowing, because a financial meltdown in Europe could push some Canadian households over the edge if it led to a global economic slowdown and a rise in unemployment.
That was followed by a Statistics Canada announcement that after falling slightly at the end of last year to 150.5 per cent, Canadian households' ratio of debt to disposable income rose to 152 per cent in the first quarter.
The younger Canadians who leading the luxury charge have a woeful “lack of understanding around consumer credit,” said Laurie Campbell, CEO of Credit Canada Debt Solutions which has identified overspending as the primary reason for bankruptcy (over job loss, health problems, marital breakup).
“You can’t blame a generation when they’ve been told over and over again that they deserve it, they should have it, ‘Go out and have fun,’ ‘Don’t take life so serious,’ ‘The party is now;’ and part of that phenomenon is spend, spend, spend,” she said.